BILL'S ANSWER
Generally speaking, a creditor can garnish your wages only after obtaining a judgment against you in your local courts. In your case, once your vehicle was repossessed, the creditor would have sold it in an auction and applied the proceeds towards the payment on your spouse's loan. Your spouse would also be held responsible for any balance that remained (now called the deficiency balance).
All states have a body of statutes in their codes of law called, "Limitations of Actions," commonly referred to as the statutes of limitations. The idea behind these laws is that we as a society have decided that we don't want old debts hanging around forever; we want people and businesses to be able to move on with their lives without worrying about being sued. The length of time a creditor has to sue you depends on your state of residence and the type of debt. For example, many states allow longer for creditors to file suit to collect on closed ended consumer loans than on credit card debts. Most states give credit card issuers 3 to 4 years to file suit after default, but some states allow as many as 10 years. Check out BCSalliance.com. This site has more information about statutes of limitations and a list of limitations by state.
If your creditor filed the suit before the statute expired then they are justified to claim any interest charges that were due since the time of the last payment. I strongly suggest that you pull a credit report for your spouse and inspect it in detail. If a judgment is already reported, then there is nothing much you can do other than honor the payments that you have committed to. You can obtain a free copy of your reports at AnnualCreditReport.com.
In case there is no judgment and if the statute of limitations has expired then you are not required to pay on the debt, but bear in mind that the creditor can still continue their collection efforts even though the statute has expired, it just gives you grounds to dismiss it in case they do take your husband to court.
Federal law (US Code Title 15, §1681c) controls the behavior of credit reporting agencies. This law is known as the Fair Credit Reporting Act (FCRA). Under FCRA §605 (a) and (b), an account in collection will appear on a consumer's credit report for 7.5 years. The clock starts approximately 180 days after the date of first delinquency on the account. To learn when an account will be removed by the credit reporting agencies (TransUnion, Equifax, and Experian and others), add 7.5 years to the date of first delinquency. Subsequent activity, such as resolving the debt, is irrelevant to the seven-year rule. However, if the debt is a tax lien, that can appear for seven years from the date of payment. A bankruptcy will appear for ten years from the date of the final order. Delinquent federal student loans can be reported indefinitely, i.e., for as long as they are delinquent.
Just because a debt is removed from a credit report does not mean the statute of limitations has passed. Federal credit report laws and a state statute of limitations laws are separate and independent from each other.
I wish you best of luck in resolving this old debt and hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
April 13, 2010
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